Why Fundraisers Don’t Use Market Research

The million dollar question in fundraising is “why do people donate?” and the million and one dollar question is “why don’t people donate?” And the best answer so far is “…because no one asked them.” And that’s also Omar Mahmoud’s answer to the question “why don’t fundraisers use market research?”

Changing the question again, why do marketers use market research, which costs money and time? And the answer is the boots, the tower, and the pizza.

A company sent two researchers to investigate the potential of boots in Bongoland. One researcher sent a message saying “there is no potential here, no one wears boots.” The other researcher called to say “huge potential, lots of people and no one wears boots.”

Yes, marketers search for opportunities. Opportunities are gaps between what people have and what they need, want, or dream of. This includes the gap between my difficult-to-comb hair and my desire for great looking hair, the gap between my out-of-shape body and my dream to be an attractive athlete, and the gap between my limited budget and my wish for an exotic vacation. The marketers job is to fill-in these gaps, profitably. And as in the boots story, opportunities are not that obvious; one person thinks there is an opportunity for boots in Bonglonad and the other thinks not. Some needs are clearly expressed while other needs are unarticulated. More research on boots in bongoland is needed.

The architect in the 12th century showed a blueprint of the Pisa tower to the ruler of Pisa and said to him “…and by not making soil tests we can save three weeks and a thousand ducats.” And the rest is…the leaning tower.

Reducing risk, is the second reason for doing market research. But again, a cynic might say this leaning tower on a poorly laid foundation attracts more tourists than straight towers. Well, judgment has its place in decision making but no one is counting the less famous leaning or fallen towers.

Everyone of us is always looking for ways to identify and pursue opportunities and to spot and manage risks; marketers, politicians, fundraisers, and spouses. The difference among different groups is in how we they so. Some of us do it casually and informally, by asking friends, while others take a more systematic and disciplined approach, that is, market research.

Market research is simply the application of the scientific method of investigation to marketing and, hopefully, to fundraising; observe a phenomenon, develop a hypothesis, collect data, test the data against the hypothesis, validate or refute the hypothesis, develop new hypothesis, and so on. That’s how knowledge grows over time.

At the opportunity stage, researchers look for insights. Insights are pieces of knowledge about people that involve fundamental truths, emotions, tension, and a potential link to the brand. Insights serve as the core around which product and communication ideas are developed. Examples; men care about their appearance but they don’t like to admit it, tasty food is delicious but fattening, and healthy food is nutritious but tasteless, I like to receive gifts but I have so much clutter at home. Powerful insights usually involve tension expressed in a ‘but’.

The insight then forms the core idea around which a concept is developed (e.g. virtual gifts), which is then turned into a specific tangible or conceptual product (donate 10-50 Euros to buy seeds, goats, condoms, or health kits). At each and every step, potential donor and buyer opinion is sought to refine the proposition. Once the new product is on the market, research can assess the public’s awareness and real-life reaction to it. At every step of this process, research provides opportunities for improvement; a twist on the core idea to dimensionalise it a new way (virtual gift is a double gift), for reframing the cost (less than the price of a hair cut, or a parking fine), to identify a new target group (young, progressive females interested in global environmental issues), to refine the communication in line with local culture (a gift means has to be personalised in this culture), etc. The researcher’s mindset is ‘When in doubt, find out’.

Towards the end of the launch process, research can be used to reduce the risk of costly errors; targeting the wrong group, using an irrelevant insight, demanding too high a price etc.

What success in business boils down to is innovation and building brand equity. And that’s the second area where market research can add significant value. Building a strong brand should be public (call it consumer, customer, buyer, donor) centric. Every organization must start with a market assessment study that assesses how the public views the market, its extensions and boundaries, segments, and key competitors. Questions should be asked about what the important needs and desires are in the category, from the public point of view, and to what extent these needs are satisfied with existing brands, including your own. This translates directly into an Importance/Satisfaction quadrant with one particularly actionable box of opportunities; important but not satisfied needs. This is then translated into products, offers, and communication messages. This study should also identify primary and secondary target groups whose demographic, socioeconomic, and psycho-graphic profiles fit with those of the organization. The study should also outline which channels to use to reach the target and occasions when it is most opportune to reach the target audience. To summarize, this fundamental study should answer five Ws: Where to play (which market segment to focus on), Who to Target (your donor target), What message to deliver (what messages are relevant to your target), When to deliver the message (occasions and events when your audience is receptive), and hoW (What media to use). The outcome of this study then becomes an integral part, if not the foundation, of the organization’s strategy.

So, given all these benefits of market research, and many more, why aren’t fundraisers using it more often?

The main reasons are:

Because no one asked them.

Because fundraising is different.

Because I still don’t believe in market research.

Because we are testing anyway.

The first reason is too obvious to be noticed! No one asked fundraisers to do research. So, the ball is in the researchers court. Researchers, especially in research agencies, should spread the word about market research and help drive the use of market research for fundraising. There is no better time to do this than today when the public is engaged in making poverty history and corporations are putting social responsibility on their agenda.

The second reason is that fundraisers think fundraising is different from other products and services. And I agree. But I must add that people working on any product (from cars to chewing gum) or service (from insurance to parking) think their business is absolutely unique and could not be measured or predicted in a similar way to other businesses.

And I have seen that with proper benchmarking, any business is measurable and predictable. Yes, you are different, just like anyone else.

It is true that in making a donation the donor gets back no concrete product (soft drink or mobile phone) or even an obvious experience (vacation or entertainment), but all products and services involve an emotional component in additional to the functional benefit. In fundraising the emotional component is strongest. But all other components of business transactions are there; product, price, communication, transaction (yes), reward, relationship, loyalty, etc. So, the difference between fundraising and other categories is one of degree, not essence. Incidentally, people everywhere also think their country is different from any other country, unlike other countries which are fairly similar. But that’s another article.

The “I don’t believe in market research” often attributed to a 59 year old fundraising trainee, is the most common argument against using market research for fundraising. “People don’t tell the truth in opinion surveys.” That’s true, for a variety of reasons – social and political correctness, desire to please, memory failure, etc. – unfortunately people exaggerate and lie in opinion surveys, but, fortunately, they do so consistently. Therefore, with proper benchmarking, we can adjust their responses to reflect reality. For example, if 40% claim they would donate in response to a particular concept or idea, and we know the over-claiming factor among that target group in that particular country is 50%, we can adjust the claimed donation intent down from 40% to 20%.

Paradoxically, testing is another important reason for not researching. Everything else equal, should you test or do a piece of market research? The answer is simple; test. Testing is a straight measure of behaviour, not attitude or claims. But testing and research are complementary not competitive. Testing is Yes/No. Research is Why and How. You should develop learning plans, not research plans, for your projects. These should include desk research, competitive analysis, trend tracking, market research, and testing.

I am optimistic and I think fundraisers are ready and willing to embrace market research. The fundraising textbooks always stress the importance of knowing your donors and listening to them to improve targeting and communication. The fundraising presenters I listened to often asked their audience “When was the last time you talked to your donors?” Good question.

The pizzeria manager did not like the way his waiter treated a customer so he walked to him and asked “How much do you think this customer is worth?” The waiter thought for a second “hmmm, seven dollars for the pizza, and two for the drink, about nine dollars.” “No,” responded the manager “He’s worth about 5,500 dollars, that’s how much this customer would spend with us in a lifetime if he leaves our pizzeria satisfied.” That’s why market research is important, to ensure your customers are satisfied.

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